While speaking to students at USC's Greif Center of Entrepreneurial Studies this week, I was asked for a list of books that have been most beneficial to me in business. You'll find those titles below, but I wanted to quickly preface why acquiring superior insights, especially through credible literature, is so critical to your success.
Several years ago, I had the pleasure of meeting with vaunted investment banker Bill Hambrecht at his office in San Francisco. Hambrecht not only helped companies like Apple Computer, Google, Adobe Systems, and others go public (IPO), he also helped transform the initial public offering process by applying a Dutch auction approach, providing an arguably more objective way to price a company's stock.
One of the major takeaways that I had from this encounter was the extraordinary impact that a single book had on Hambrecht's investment philosophy. The book was Clayton Christensen's The Innovator's Dilemma, and Hambrecht expressed that he typically invests in only those companies that demonstrate the book's characteristics (later discussed by the two men at TechCrunch Disrupt 2014).
After seeing someone of Hambrecht's stature so profoundly affected by a book, I dedicated thousands of hours to reading books on business strategy, execution, and management but also on philosophy, psychology, and history. Some of the books have been instrumental in shaping decisions as a startup founder, advisor, and investor.
I feel strongly that we must all take time to study other businesses in order to improve our own, and I'm always astonished when founders either don't read books or blatantly ignore well-proven concepts that could benefit their companies. Compared to most articles, podcasts, and videos, books generally demand a tremendous amount of research and dedication by their author(s) so reading books that have been vetted by credible business operators can help you thrive.
The Innovator's Dilemma/Solution by Clayton Christensen
This book focuses on the general inability of large, established companies to innovate. As such, this dilemma presents an opportunity for smaller, more agile organizations (typically startups) to carve a hole in the larger company's lower-margin business and then move up and attack the higher-margin customers, too. To do this, the disruptive startups often use technology to provide a slightly inferior and/or lower priced product to win over initial customers (e.g. airbnb and Dollar Shave Club).
Blue Ocean Strategy by Renee Mauborgne & W. Chan Kim
This profound strategic text argues that companies should avoid highly competitive markets, known as "red oceans," and instead focus on "blue oceans" that present little to no competition. The reason is simple as increased competition typically results in lower prices which erodes profit margin. In order to create a blue ocean, the book depicts how companies should differentiate their products and lower costs, as Cirque du Soleil did with its reinvention of the circus industry.
Zero to One by Peter Thiel
This book is jam-packed with sage advice from one of the most prolific entrepreneur/investors in existence. Distilled from a class that Thiel taught at Stanford University, it covers a range of topics like the critical need to establish a niche, how sales are equally as important as product development, and the myriad benefits of media coverage for a startup. But perhaps the most compelling notion that Thiel presents is for founders to build companies around an important truth with which few people agree with them, and he provides seven guiding questions that such startups should satisfy.
The Lean Startup by Eric Ries
For many entrepreneurs, this has become a standard operating manual for the earliest days of their companies. Applying lean concepts from Toyota's Production System, it encourages entrepreneurs to talk to potential customers BEFORE building their initial product offerings. Known as "customer discovery," entrepreneurs can leverage feedback to develop a "minimum viable product (MVP)" for customers to use. From there, a series of iterations are made to the MVP until product-market fit is achieved, which reduces the risk of wasting time and money by overdeveloping products that customers don't need.
Crossing the Chasm by Geoffrey Moore
This is probably the best book ever written about how a startup should identify and dominate a single market or niche, in order to later grow into a larger enterprise by accessing the majority of customers and market share. Moore describes how it is critical for early-stage ventures to win over a single customer faction, known as a beachhead, before attempting to scale the business. The book provides a slew of examples and step-by-step instruction for entrepreneurs to find early adopters of their product(s) and then move into the mainstream, thereby "crossing the chasm."
Great by Choice by Jim Collins & Morten Hansen
Based on extensive research, this book has great insight into what separates the most successful business operators (known as 10xers) from their peers. For instance, it depicts how 10xers are able to plan for virtually all contingencies, helping them prevail over their competition in dynamic business environments. But perhaps the best advice in the book is for companies to run small tests before devoting considerable resources to unproven opportunities; this is known as firing bullets then cannonballs. While this seems simple, many companies jeopardize their futures by over-investing in opportunities that don't materialize.